Magazine article American Banker

FCA Completes Mortgage Deals for $3 Billion

Magazine article American Banker

FCA Completes Mortgage Deals for $3 Billion

Article excerpt

NEW YORK -- The Financial Corporation of America, holding company for the nation's largest thrift, on Friday arranged two mortgage securities swaps totaling $3 billion to shore up its American Savings and Loan Association, which has been facing a severe outflow of deposits.

The company also declared a regular quarterly dividend on its common stock and on an issue of floating-rate preferred stock.

In two separate swaps, Financial will exchange single-family mortgages for $2 billion in mortgage-participation certificates from the Federal Home Loan Mortgage Corp., or Freddie Mac, and $1 billion in mortgage-backed securities from the Federal National Mortgage Association, or Fannie Mae.

Both deals were arranged through Financial Corporation of America Mortgage Securities, which is acting on behalf of American Savings and Loan, based in Stockton, Calif. According to a statement by Philip Brinkerhoff, one of three Financial Corporation presidents, the mortgage securities provide the thrift with more liquid assets than straight mortgage loans.

The Freddie Mac swap was the largest deal of its kind ever done by the mortgage loan remarketer through its "guarantor" program, under which the corporation exchanges mortgages for securities. This is the fourth deal of this type that Freddie Mac has undertaken with Financial.

Freddie Mac will receive one- to four-family fixed-rate conventional mortgages from Financial.

Freddie Mac said it hasn't yet been determined whether the thrift company will hold the mortgage securities or use them as collateral for a borrowing. …

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